Ekabo Home Financial Freedom Mastermind Podcast
A podcast for those who do not believe they were put on this earth to work 40 to 50 hours per week for 40 to 50 years, to hopefully retire at the age of 65.
Ekabo Home Financial Freedom Mastermind Podcast
147. Are You Sabotaging Your Financial Future? The Shocking Truth About Delayed Gratification!
🌟 You don’t achieve financial freedom in real estate by playing it safe—you succeed by embracing smart strategies, community support, and long-term vision! 🌟
Welcome to the Ekabo Home Financial Freedom Mastermind Podcast! In this episode, host Niyi Adewole shares invaluable insights on how to navigate the complexities of real estate investment effectively.
💬 Quote of the Day:
"How long can you delay gratification?" — Niyi Adewole
This quote emphasizes the importance of patience in real estate investing. It suggests that making short-term sacrifices, like living in a smaller unit to maximize rental income, can lead to greater long-term financial rewards and success. Delaying gratification is key to achieving financial freedom.
What You'll Learn:
- 🎯 The Importance of Goal Setting: Niyi kicks off the session by reflecting on the rapid approach of November and the significance of staying focused on our goals as we near the year's end.
- 🏡 Real Estate Investing Insights:
- 👥 Guest Introductions: Meet our guests, including Boneka, AJ and Desmond, who share their experiences and aspirations in real estate investing.
- 💡 House Hacking Strategies:
- AJ shares his personal journey of living in a smaller unit of a duplex to maximize rental income from the larger unit, emphasizing the sacrifices made for long-term financial gain.
- Niyi adds his perspective on the importance of delaying gratification and building a robust real estate portfolio.
- 🔧 Navigating Property Management:
- Desmond Howard joins the conversation to discuss his experiences with property renovations and the challenges of managing short-term rentals.
- The panel discusses the complexities of property management, including the transition from short-term to mid-term rentals and strategies to attract quality tenants.
- 🏗️ Ground-Up Development Challenges:
- Niyi shares his experiences with a ground-up development project in Louisville, detailing the hurdles faced with city regulations and the decision-making process involved in real estate investments.
- 💰 Tax Strategies for Investors:
- The discussion shifts to tax strategies, including the benefits of cost segregation and the importance of partnering with knowledgeable CPAs for effective tax planning.
- The panel emphasizes the significance of understanding tax implications when investing in real estate and the potential for significant savings.
Key Takeaways:
- 🔄 Flexibility is Key: The ability to adapt your investment strategy based on market conditions is crucial for success.
- 📅 Long-Term Planning: Consider the long-term implications of your investments and strategies, especially regarding taxes and property management.
- 🤝 Community Support: Engaging with a community of like-minded investors can provide valuable insights and support on your financial journey.
⚛️ Why This Matters:
🗓️ Tune in every Wednesday at 7 PM Eastern! Don’t miss out on our journey toward financial freedom through smart investments.
👉 Hit that subscribe button and turn on notifications so you never miss an update! Let’s unlock your potential together!
Our Links
➣ Financial Freedom Mastermind Facebook Group - https://www.facebook.com/groups/53083...
➣ Peer Space Host Referral Link https://www.peerspace.com/referrals/g...
➣ AirBNB Host Referral Link https://www.airbnb.com/r/niyia41
➣ Ekabo Home Network (IG, Youtube, Email) https://linktr.ee/ekabohome
Niyi Adewole is a licensed realtor in Georgia, brokered by EXP Realty. Feel free to reach out at Niyi.Adewole@exprealty.com if you would like to work with an investor friendly real estate agent.
Welcome to the financial freedom next to my food for 50 year work project and accelerating our journey towards financial freedom. We serve as a hub for connecting with fellow members during our sessions so you can share successes, ask questions, and keep the momentum going.
SPEAKER_03:Good evening, everyone. This is Nee Adwale, host of the Akaaba Home Financial Freedom Mastermind Group. And I'm excited to be joining you on this Wednesday, October 22nd. And we are almost in November. Literally, next week is going to be November, which is crazy to me. It feels like we just kicked the year off. And it's pretty exciting to see that we are already toward the end. And so I'm super excited to continue running toward the goals and achieving them alongside everybody in this group. And AJ, how you doing, man? Hey, what's up, Nick? Give me one second so I can connect my headset. Sure, sure. Well, Nekka, welcome to your first Akaaba Home Financial Freedom Mastermind podcast.
SPEAKER_01:Thank you, Nick.
SPEAKER_03:Come on now. How are you doing?
SPEAKER_01:I'm great, thank you.
SPEAKER_03:And Giselle? I am doing good. And one of the things that we haven't actually talked about, well, we talked about it a little bit, but real estate investing. Have you ever thought about it? Is it something that you want to get into down the road?
SPEAKER_01:Definitely, yes.
SPEAKER_03:That is fair. That is fair. That is fair. I know you're coming out of South Africa. What does it look like down there from an investing standpoint? Is it more condos? Is it more apartments? What does it look like compared to, say, the US?
SPEAKER_01:Um, we've got a little bit of everything. I mean, apartments are coming up a little bit more now, but we've got more like your standalone houses. That's still the predominant. So that's what it's looking like. A little bit of everything.
SPEAKER_03:Come on now. And AJ, first and foremost, everything good, right?
SPEAKER_02:Absolutely. Yeah. I know we had a little scare over the weekend as we were playing tennis, but by the grace of God, everything is good.
SPEAKER_03:So come on now. That's the most important. Everybody has their health. We will take it. And and how are you doing with the property, man? Are you sitting in it right now?
SPEAKER_02:I am, yeah. So for those who don't know, this is the duplex that I acquired on August 1st. This side is one one, and the other side is at three, two and a half with a bonus room that we've converted into a game room. So if you want to know why we're we're the crazy people living in the one-one, uh, me and my wife, that's because we want to maximize the the returns that we get on our investment, having the ability to earn more revenue on the larger side. So um, it's a bit of a sacrifice for now, but it's a sacrifice that you know, willing to take for the long-term gain for sure.
SPEAKER_03:And literally, that's the key to success. How long can you delay gratification? I'm actually sitting in the back unit of my duplex, which you've been in, and that unit's much bigger, much grander than the unit that I stay in. And that was a dogfight trying to convince my wife, like, hey, listen, let's just do this so we can rent the back out and pay for most of the mortgage. But to your point, if you're willing to live in the smaller unit, rent out the other unit, it just allows you to have more saved that you can use for the next and the next and the next to continue building out a portfolio that will pay you well into uh your later years.
SPEAKER_02:For sure. And then to kind of piggyback on that too, is I think this is a very you know specific time for us to take advantage of this because it's I I realize that it's not always going to be like this. I am a family man, I do want to have a family, I want to have children. So um later on down the road, I can't really imagine trying to raise two or three kids in just a one bed, one bath. So uh while we we have the flexibility and opportunity to, we may as well take advantage of that so that we can set ourselves up for long-term success down the road for sure.
SPEAKER_03:Dude, you are spot on. And I know that you know uh that I recently had a kid and literally the time is ticking. Once uh they uh he becomes of school age, I can no longer do this. So I'm trying to get as many of these duplexes, triplexes as I can. And then when that happens, we got to go do, you know, single family white picket vents and then in the neighborhood with the good school and all that stuff.
SPEAKER_02:Man, you're still doing the house hacking route. Um, I listen to people, you know, just on podcasts, especially bigger pockets. I'm always tuning into those guys and always listen to um them and and their experience with just trying to house hack for as long as humanly possible, as long as it makes sense, as long as their uh wives don't like kill them and strangle them from having to share kind of walls. So just doing it as as long as possible. Um, I'm I'm grateful that you know my wife is on board with me, which is a a huge uh just asset in trying to really prepare our uh financial freedom journey and and get to that a lot faster and sooner. So having a partner who's on board with the same vision and goals are is just extremely important, especially if you're trying to, you know, just go further and get to that financial freedom a lot faster.
SPEAKER_03:100% agree. And the way you're doing it, the way all of us are doing it on here is the way, which is doing it before you know kids and things of that nature get in, right? Because then you've already built up the muscle, and so it's a lot easier to continue and move forward uh to a certain extent, right? You know, you still do get to stay alive, all right? That's part of that's part of this investing thing. So can't have your wife take you out. We don't make it happen. And Desmond taking me out yet. No, no, hey, hey, we're still thriving, still alive here. And Desmond, how you doing, man? Welcome back. I'm doing amazing. What's up, fellas? How y'all doing today? Super good, super good. Just trying to make it happen one day at a time. Absolutely. And are you back in Georgia or are you traveling again, man?
SPEAKER_04:I'm back in Georgia. I'm back in Atlanta, just coming off of doing a mini renovation for a turnover that I had. So that unit is now an Airbnb. It's actually the unit directly next to me. It's been doing well, getting some bookings coming in. Uh I'm actually looking at a single family home that is literally across the street from my current property and also across the street from the property across the street. So it's like diagonal in a sense. Uh, that's a single family home. It's like 3-2, has a garage in the back that looks like it could be an ADU. And I'm trying to work out a seller financing deal.
SPEAKER_03:Come on.
SPEAKER_04:So I will definitely, you know, keep you guys posted on that. I had an initial conversation with the seller. We met in person. I actually had already, you know, talked to him before, made a connection, just randomly out on the street one day, saw his property was listed for sale on Zillow randomly, uh, reached out and had a conversation about it. They're open to seller financing, so we'll see. I'm hopeful.
SPEAKER_03:Come on now. Seller finance, especially right now, uh amazing if you can work out terms that will get you at least to when interest rates are a little bit lower. I've done one subject too personally, and then we've helped sell a couple seller finance. So it's it's an amazing way to get in creatively with not as much down and not hitting your credit and having to do all the things, right? Submit like 15 million documents in a sample of your blood.
SPEAKER_04:Yeah, exactly. And both of those points that you mentioned are ones that are important to me right now, right? Because I know we had, you know, started to go into an initial kind of talks about a third property for my portfolio. And I was at the time being maxed out, you know, based on the DTI and now not, you know, still not being employed, re-employed. I would certainly be maxed out, no question. And then also with the rates being where they're at, I'm really hoping I can work out some terms to where I'll meet him on the purchase price, but he has to work with me on the interest rate and try to get that down to as low as I can. So that's the goal. Definitely keep you guys posted. And I'm really curious to hear me about how the development is going down in Louisville uh and any just learnings or or you know, maybe pain points you might want to share from that, if that's you know on topic enough. Uh, because I'm I've been increasingly getting interested on ground up construction and just toying with that idea in my mind and talking to one of my mentors about it. And we've just been looking at some of the lots here in College Park to see is that something that's feasible. Uh, so I'm really curious, you know, to hear how you guys' ground up is going and it being a massive ground up project. I'm sure you know there might be some learnings from that.
SPEAKER_03:Come on now, absolutely happy to cover it. And so what Desmond's talking about is a two-part project that we did in Louisville, where we're working on where we bought 11 acres back in 2022 or 20, yeah, early 2022, we closed on 11 acres. We split off two acres to build self-storage, and we got that completed last year. And the other nine acres we had set aside to build 105 townhome units. And in one word, how it's going is terrible. So, so the storage has been amazing. Having that built from the ground up, and then now seeing the occupancy go above 60%. Now we're able to cash flow. People don't really leave like that. You can raise rents by 10%, which is a lot on a long-term rental or like a house, but on a storage, it's like$10. People be like, okay, cool. But that boosts your NOI and the value of that property significantly. And so that is something I would love to do again. The townhomes, on the other hand, man, so we've gone to the city hall a couple of times. We initially had 105 townhomes approved. And then just before we were getting ready to like break ground and things of that nature, they came back and lowered it to 88. They wanted to have more green space in that area. Uh, and so it kind of messed up the plat and the plan. And long story short, when I'm running the numbers, at 88, it doesn't make sense. Like you would have to have the top of the line rent, which we should, but you don't want to depend on that in this market. And so, long story short, that was something we discovered like earlier in the year. And about two months ago, I ended up making the decision to get out of that deal for the land. So I actually sold it back to my partner. We got it reappraised, which it went up. So I got my money plus a little bit out of that piece and just stuck with her on the storage because I'm one where I really got to believe in the project. When I look at the storage, I love that piece. I think we should have got into a place that has a lot more people. When you're looking at storage, one of the things you want to have, now I know in hindsight, because I'm a part of certain groups that helped me like with this piece. Um, taking a step back. Have you guys heard of Go Bundance?
SPEAKER_04:I know you mentioned it to me on our previous call, but that was my first time hearing of it.
SPEAKER_03:Okay. So this is something that like uh uh Bigger Pockets used to talk about a lot. It's something that Brandon Turner joined, um, David Green, and all these other guys joined. And long story short, it's like other entrepreneurs that are just chasing and getting after it. Um, if you ever heard the name like David Osborne, Pat Hyvin, these are all guys that started Go Bundance, and these guys are multi, multi, you know, tens of millions of dollars in net worth. And so, long story short, I met other self-storage investors in there and they looked at the deal and said, Yeah, man, like you want to have ideally 100,000 people within five miles of your facility to get it fully boosted. And we got like 50,000 within 15 miles because it's in the middle of Taylorsville, Kentucky. That being said, we're doing good there, pouring money into it and getting it going. But the townhomes was one where I was like, all right, after looking at that and running it by a couple other people, I'm like, okay, at 105, yes, it makes sense. You don't have to have the rent as high. At 88, that's literally cutting into like all the profit. So sold that and now I'm focused on continuing to build out here, focused on getting that storage occupancy up. And then I would like to do another storage deal actually in Georgia if I find land and a deal that makes sense to build up. Gotcha. Okay, yeah. Not the sweet story that you were looking for. No, that's what I tell you. Ground up is one of those things, even from the storage ground up, it's one of those things where it's gonna take you a lot longer, especially in the first one, than you believe. Like you're gonna be like, okay, I can do this in six months. It's gonna be like 18, you know, maybe 24 months. So you got to be prepared for that. And there's gonna be some snags that get in the way. The one benefit to it is that you know that everything that you put into it and it's brand new and that, hey, you don't have to do any capex or maintenance for you know a decade plus. Um, but it is it's a bit of a beer.
SPEAKER_04:And so with that said, too, it's interesting that the city came back. And also, I'll take a step back to say thank you for the transparency and thank you for the honesty, because it was that that I was looking for, you know, more than a sweet story or some you know, rosy deal or anything. But I think that's really interesting to hear that the city came back after having approved that development and then kind of renamed on that decision. And I wonder as you get into larger, like I think that's as a planned development, right? It's kind of what they call it. Like getting into that larger type of development, is that something that happens more often versus like if you were constructing, you know, just a single family home or duplex, is a deal like that still susceptible, I'm sure, to the city, but I I wonder to what magnitude could they disrupt the deal like they did in your case? Because I mean that's that's very significant, right? They you know virtually screwed up the numbers, and now you're kind of fighting with the city, which seems like it can be a losing battle oftentimes. So I just wonder, I wonder, is that something that is all that also plagues the smaller deals as well? I think that's initially what I would be looking at, right? We would just be looking to do, you know, probably a duplex, maybe up to like something like a fourplex on a single piece of land. Um, and I couldn't imagine even thinking about doing 11 acres and that many homes. That's a that's a huge you know jump.
SPEAKER_03:Yeah. So I'll say I'll take two things. One to answer that question, then two to elaborate on on kind of the the whole city thing. But one, on a on a duplex, single family, triplex, quadplex, you should be fine. Like there's gonna be others around there, the land's already zoned that way. With our deal, we were introducing townhomes into a place that did not have townhomes before. And so all the regulations were new. Like we were the ones going to the board to influence all that. And then the neighbors came back, right? And you know, after we had built the storage unit, they pushed back even heavier because they they realized now, like all the construction and the roadblocks. And I mean, it's not pretty when you're building something, right? There's a lot going on, there's a lot of noise, and uh, and they weren't used to that in a smaller city, and so they started pushing back heavy on all things when it came to the town home build. Because now it's like, all right, like we've seen kind of how this works, uh, and now and we don't like this in our backyard type of deal. But with a with the with like a duplex, triplex, quadflex, it should be much smoother from that standpoint. Once you get approved, there's already a blueprint, there's already other comps that are around there. You're not introducing something new, and so you should be fine. But AJ, what were your thoughts?
SPEAKER_02:Yeah, I just had a question that's kind of crazy to me that like they would allow you to kind of begin the construction of all of these town homes and then right in the middle of it, come, you know, the city come and say, hey, stop work, you guys need a permit for this, or it's not even allowed, essentially. So I'm just kind of curious, like how that even happened. I know you mentioned that you found out in the middle of the process, but even to begin with, like, I know you guys had to go through some sort of city permitting process, and for them to not kind of catch that from the jump. So is it more so like, oh, they is that your responsibility? Nike, like they're not gonna tell you you have to find out. And once you find out, I feel like it's kind of like as backwards because you've started all this work, you've invested it, you're emotionally invested as well. Um, I'm curious how you guys even got to that point in the first place without even knowing.
SPEAKER_03:Yeah. So thankfully, we didn't break ground on the town home piece yet. We had finished the storage, right? And we were getting ready to break ground and start digging and kind of getting the whole land prepped. And so there's many different things you have to do. One, we had to go through and pay, you know, about 50 grand, we'll call it, in just inspection fees. Because when you're looking at land like that, you've got to go and have an engineer dig down deep, make sure the soil and the rock is good and all that stuff. So those are just lost costs, right? Thankfully I recouped it with selling the land back to my partner because it went up in value. But those were stunt costs. And then when you look at the city, it's almost like a partnership. We had them convinced and ready to rock on the town home piece, and everything was good and we're moving along. Okay, hey, this is what we got. And then when you go to submit the final plans, they do have to stamp that. And that's when a couple more things came up. All the individuals that sit on that community or council board uh have to report to those neighbors and they live in these neighborhoods. And those guys have been rallying for you know the whole time. Hey, we hate this storage build, we don't like everything that's going on. Thankfully, I don't live in uh Kentucky right now. But my partner, right, on the weekly calls that we have, uh, has been getting the air full, right? She's going to the the school events and things of that nature, and people are letting her know in her face, like, hey, we don't like this stuff. Almost like the the the best example I can give is do you guys spend time in East Atlanta at all? Like uh near Southern Feed or any of that stuff? Well, I mean, I live in East Atlanta. So come on, like now you do. I mean, you're new, you're new to it. I've been living in East Atlanta. So so there's this guy, Philip Pellerin. Does that name ring a bell at all? Okay. So so this guy during 2008, he's a developer. And during 2008, uh, when all the real estate was going down, he bought up basically that whole strip that you see in East Atlanta, uh, all those different buildings, and he bought up a bunch of buildings in Grant Park. And so the two like food halls that you see in Grant Park as well as in East Atlanta Village were all developed by him. And he put a lot of money and time and effort into it. And back in 2008, everybody was happy about it. Now, if you look at some of the message boards on Facebook and things of that nature, people hate this guy. And I'm like, dude, like he is single-handedly kept this place up and running and and allowed for it to be what it is today. But it's a similar thing when you're trying to do something new in a town that hasn't had it before. Um, and so long story short, when it comes to that ground up build, uh, two things. One, uh, it's better to do something that has already been there, if possible, right? And kind of go from there. Uh, and two, you want to have the right partner, right? Thankfully, I had an amazing partner who we built a seven-year relationship before we got into doing business. And so when I brought up, like, hey, the numbers aren't looking right for me, I don't like this deal anymore. Let's talk through what this can look like. It was uh amicable and we were able to come to an agreement on a number that made sense and bring in appraise and all that stuff. If you're in the deal, especially if you're doing a bigger deal where you're gonna have partners and you don't know, like, and trust your partner, almost like somebody that you would marry, quote unquote, um, then you you do not want to uh to get into that deal because it can go bad quickly. Yeah, makes sense. Thank you for sharing that. I appreciate it. Of course, definitely food for thought. Come on now. But I like what you're talking about. Ground up, single, duplex, truck, quadplex. The only thing is just budget more time than you think. If they say six months, like it's probably gonna be closer to 18. Full training.
SPEAKER_04:Yeah, that yeah, that absolutely makes sense. I feel like it's the same way with the budget as well, right? If we say it's gonna be 300,000 to construct this home, let's just budget for I think anywhere 25, 30% at least is is is reasonable for a buffer. Uh, and that is more so what I'm looking at. And there are properties, new construction properties on the street prior that the land was sold for 141 uh exactly,$141,000. And there was a four-bed, four-bath, like a two-story single-family home built on that same lot that sold for$675 in July. And I'm like, Jesus,$675, that's a lot of money. And it makes me wonder I think understanding the gap, you know, understanding the construction cost is I think the biggest piece that we would need as a partnership, and just me personally would need to go figure out and just talk to more people and ideally try to talk to that builder to figure that piece out. But it's definitely something I'm looking at, especially with where the market's at right now and doing it almost like we if we built that same house, I wouldn't be mad. Like we might take those same blueprints, that same layout, we've seen this before, and just do that on the street over, right? It's like our comparable couldn't be closer. And I it's honestly, I'm trying to do if I were to get into something like this, that's what I would ideally like to do is follow the grapes, copy what's already been done, not try to necessarily reinvent the will, but I mean, you know, or do something brand new, which after hearing your story, I definitely I think I'm even more cautious of. But yeah, it's definitely something that's on my mind. So if you know of any people that are doing new construction or want to talk about new construction, they're definitely free to hit me up because I'm I'm definitely looking to soak up any knowledge I can on that.
SPEAKER_03:Come on now. And we have GCs that help people with that, and we've given them to a couple clients where they've done full rehabs and they also do ground up construction so they can help you with like numbers when the time comes. Yeah. And you start getting a little tighter. So yeah, definitely can send some people your way.
SPEAKER_04:Yeah, because that's the piece I think I'm also shaky on is who would be the GC, who would be the team, and that in itself is like a partnership and really being able to trust the GC and also trust the people under the GC as well. So that's definitely all something that would need to be figured out. So I might end up hitting you up for that at some point. I appreciate it.
SPEAKER_03:Come on now, and having a lock tight contract, right? You need to make sure, like, hey, everything's gonna be uh uh solid and spelled out there and and written in agreement because it's a lot of money on the line, and people's memories start to get fuzzy when uh when the when there's that much on the line. Like, no, no, here it goes, right here. Here was the agreement. No, yeah, it makes sense. Come on now. But AJ, what's new for you, man? Anything top of mind?
SPEAKER_02:Oh man, um, you know, just been extremely busy over the past, I would say, three, four months. Um, obviously going through the acquisition phase, getting this new duplex, and now having three different pop properties under my portfolio now. Um, I'm really uh happy to be in the phase that I'm in now because um I'm in like the stabilizing phase, but with the stabilizing phase is kind of less running around and actually fixing things up and getting the property ready. Fortunately, we were able to get our properties up and running in a pretty quick time. So just as a recap, you know, we moved from the four-bed, four-bathroom in Decatur, uh, moved out of that and then purchased a duplex, living in one side, house hacked the other. Um, but the crazy part about doing that was we had to get up and running two different short-term rentals as quick as possible. So um, me and my wife, we were like really busting our butts like each and every day uh for like two months straight. Basically, just like anytime we would, we really we didn't have a ton of time. We would work and then like as soon as the day is over, we have to, you know, get these properties up and running. But I think we did a really tremendous job setting these properties up. I want to say the four-bed four bath was set up in six weeks, and then the duplex was set up in eight weeks. So if you ask me, that's those are pretty solid numbers, especially if you're closing um and then having to get two short-term rentals uh up and running. But for the most part, we're good right now and we're just in the stabilizing phase, uh, looking at our numbers, making sure we're tweaking small things here and there, but definitely a lot less busier than we were over the past few months for sure.
SPEAKER_03:Come on now. Hey, and and I I don't put them together as much anymore, but man, it does take a lot of energy, effort, and time. And so I know you got just a sigh of relief to have them both up and running. And I think you mentioned that the one indicator especially is has taken off a bit.
SPEAKER_02:Yeah, yeah, for sure. So I think um, and I think you know, I was talking to you about this a little bit previously, but um, as we were doing market research and figuring out, okay, how we can make this property unique, or honestly, as opposed to trying to like so yes, we want to focus on the furnishing aspects and making it more luxury and things like that, but there's a ton of other luxury properties, ton of other four-bed, five bath or four-bed, four uh, I'm sorry, four beds, uh, four uh five baths um as well. Um, so we just wanted to basically figure out how can our property stand out um as it currently is. And the unique thing is that we have that extra in-law suite as well, which other properties do not have. So we have a separate living space under one roof. So that's something that we really make stand out in our uh short-term rental listings. And as we've been getting bookings, we've noticed that our guests really enjoyed having that separate space and still being under one roof. So that one has really been doing well. The duplex a little bit slower, probably because of market conditions right now and just kind of like the government shutdown and things of that nature. Um, but we're hoping to kind of like just let time go by. And I know October and November are really busy months in Atlanta. You have a lot of like sporting events and things of that nature. So um just kind of kind of be impatient right now, but over overall, just trying to stabilize our properties and and get the ball rolling from there for sure. Nice so can I jump in me?
SPEAKER_04:Yeah, so AJ, on that, how is your strategy evolved? And I'm curious if it's changed at all because I know before you were mentioning that you were leaning heavy into Furnish Finder and you were finding a lot of success there. Are you still doing that? I was fortunate to find one tenant off of Furnish Finder. He stayed for a while, but in my experience, it's kind of like a diamond in the rough situation to where you're constantly trying to feel those leads that are coming in and you're trying to find that perfect person. And it's for me, it's been tough to really get that match to be right. And I'm curious to hear how that's been for you, and especially being in a different area of Atlanta. Um has your strategy pivot on that at all?
SPEAKER_02:Definitely. So um, we always want to just be flexible, right? And we're gonna do what's most important for us uh at that point in time. Um, so when we are acquiring our properties, we want to make sure even if it can't work from a short-term rental perspective at the minimum right now. I know it's very challenging with the Atlanta market to justify like long-term rentals, but the midterm market is definitely still feasible. So we just kind of want to be flexible, basically. And um, you're right, it is challenging to kind of source those midterm tenants. It does require a bit of more lead work. And that's mainly because, you know, when you're on the short-term rental OTAs like verbalbooking.com, even if you have your direct listing set up, things of that nature, they're gonna do the marketing for you, right? But when you're going into the midterm game, you're kind of like your own marketer. You're you, you know, you have to advertise your properties, things like that. So you're right, it is a diamond in the rough. But when you do actually source that tenant, it feels great. It's like you struck goals because you know, you get to, and I think you and I have talked about this, right? You if you pretty much just get a tenant and they sit in the property and and they pay for months, and you really don't have to do a ton, you know, you don't have to worry about the turnovers, you don't have to worry about the stress and headaches of, you know, bad guests on Airbnb or things like that. So our strategy to kind of be more straightforward and answer your questions, I wouldn't say it's shifted because we're we're always just trying to be flexible, right? And we just want to do what makes the most sense for us at that point in time. However, looking forward this time around, we actually do want to lean a little bit more into short-term rentals. I know historically around this time frame, I don't think I've been hosting for about three or so years, maybe three, four years. Around this time frame, we're like always doing midterm rentals. So this is the first we have not had a midterm tenant. And the purpose of that is just trying to really lean into the short-term rentals, get our reviews up on um Airbnb. Like, because this period, we've always done midterm rentals. Like, you'll look at some of our properties, and like we don't have like a ton of reviews on our properties, and we've been in the game for like all this time. Well, that's because we've blocked it off because we've had midterm tenants and things like that. So I really this time around, me and my wife, we just wanted to lean into the short-term rental game. Um, and that's mainly because you can always or theoretically maximize your earnings potentials, right? Because you're charging on uh a nightly rate versus a monthly rate and things like that. So we're really leaning into it. However, if things, if we're noticing, you know, slowing down and and travel and hospitality and things like that, especially you know, with the government shutdown, we will make no hesitation to switch over into midterm tenants for sure. But it does require a bit of life work, like you mentioned. But once you do get someone in there, it's definitely worthwhile because, like I said, you just kind of set it and forget it.
SPEAKER_04:Yeah, they really are like the golden tenants at times, especially paying at or near that that short-term rental rate, and then they're in there for months.
SPEAKER_02:Oh my goodness, it's literally like it's really the best of both worlds, yeah.
SPEAKER_04:It is, yeah.
SPEAKER_03:Recently, um, have you guys heard of L Solutions and are you on there? ALE solutions.
SPEAKER_04:I actually do think I'm on there. Are they uh like housing provider? I looked, I looked around at a few of those, and I want to say ALE solutions. Is that the one did they drop like a preferred program recently?
SPEAKER_03:They do, they have a preferred program.
SPEAKER_04:Yep. Okay, yeah. Because another one of those types of companies came out with a preferred program recently. Because I know that there are multiple like that that you know field those clients. So are you partnering with them or do you have a connection with them? Because I know we've talked about this previously. You have been a lot more intentional about making these connections and really leveraging the size of your portfolio.
SPEAKER_03:Absolutely. And it's it's a little easier than the furnished finder, just because like the furniture finder, you have to have a dedicated person going on every single day, as you mentioned, to like, okay, who sent the message? You know, somebody can say something at midnight, you want to be the first one there. It's like, hey man, like it's almost like it feels like you're trying to sell something on Facebook market. It's hard to automate that piece, right? And so uh we were always looking for more ways to leverage that whole portfolio. And so ALH L ALE Solutions has come through with a couple. I think this is the third person they've given us so far over time, right? But we just got somebody into do you remember the place we did the mixology event uh last year where we had the mixologist and we were like had the shakers and stuff? I know AJ, you you you Yeah, I wasn't there. Was that last year? I thought that was two years ago. Five five. It might have been two years. But do you remember that we did it in? I do remember that. So that spot, we actually have uh an uh insurance tenant in who had their house burned down in Decatur, and they've been there since I want to say like maybe June, paying$4,800 a month, and they just keep extending because it takes a while to build a house. So first it was a three-month, and now they're extended all the way to the end of January, and they're probably gonna need to extend again. It's awesome when you get those type of tenants in there. And that was one where we just kept uploading all of our properties or not kept, we just did it one time, and then they reached out to us and said, Hey, we think this one might be a fit. They reached out on a whole different property, but that property was occupied, and so we took them over here and they liked it, and we said, Okay, we'll work with your benefits uh insurance provider and and see if we can get work something out, and we we did nice, that is awesome.
SPEAKER_04:That's so awesome. And I had I had a similar situation, right? Where I had a guy, he was started saying mid April, he just moved out at the end of September, paying three grand a month the entire time, didn't complain. I mean, I was like, dude, do you have any buddies like like any friends that need a similar place? Uh but he also came through on insurance, and unfortunately, his house had. Burned down as well. And I don't want to be like the you know firefighter chaser, you know, guy. I don't want to be chasing the fire truck around trying to find these people. But I am very curious to know the companies that work because I feel like there are multiple companies like that. And my concern is like, okay, I upload my property, some of them want to fee and then maybe get nothing from that. But it's cool to hear that that does and has worked for you. And I'm definitely gonna lean more into that. And I'm also curious too about like even contacting directly with insurance companies or potentially, especially with me with a portfolio like yours, like maybe like an airline, right? Where they place people in different hotels. So I'm just trying to try to even think thinking about more of those kinds of strategies to be more intentional about attracting these types of midterm guests.
SPEAKER_03:Yeah, one of the things we did to really lean heavy into that is we put together a drip campaign on our CRM, right? To where it can send out emails like once a month, not crazy, just once a month to different people. And so you you know you get people like through Airbnb, through Furnish Finder, and through some of these other sites where they'll reach out to you for that midterm rental to lease it out for a good amount of time. And so what we do is when we get somebody's contact, we just plug it in there, tag them in the drift campaign, and then it highlights one of our properties every single month and also puts a link or a spreadsheet attachment to show them all the other addresses with a link to the property so they can see it, how many beds, baths, so they can see quickly like, okay, beds, baths, cost, and and the property itself. So I'd like to think it's working, right? It's it's not like you're getting a booking every day, I wish, but we try to do that anytime we see somebody that is uh is helping in that realm from a housing standpoint.
SPEAKER_02:And I think um, you know, to your point, Desmond, I definitely wouldn't look at yourself as like the firefighter guy for sure. Like, um, I know although it seems like we're chasing after people who need housing, but that's the thing. Like it's a need and it's something that we're providing, especially in situations where a family's house is on fire. Like that's a very devastating situation. So uh us as property owners and and and portfolio managers and things like that, we're providing something that a family can get into right away. And then on top of that, they don't have to worry about the furnishing and you know, most of their items have likely been diminished or burned from the fire, you know. So I think we're providing a very valuable service that families can just kind of move into right away. Everything is already up and running. Don't have to worry about utilities and pretty much just try to pick the pieces up as they try to figure out the insurance piece.
SPEAKER_04:Yeah, absolutely. Absolutely. I was being slightly facetious, but no, you definitely make a good point. And you're right. And I I I 100% agree for sure.
SPEAKER_03:And age, I know AJ and I talked about it a little bit, but Desmond, cost segregation. Have you started to pursue that strategy and and cost eggs some of these short-term rentals properties?
SPEAKER_04:So I have not pursued that yet. And the way my taxes were being filed on the first go round, because it's been a couple, it's been a couple or you know, a few years now, they weren't really filed in an advantageous way to allow for that. And I was working with someone who wasn't as knowledgeable about this specific type of situation where I've got two short terms, I had a long term at the time, and it was my unit. And the tax advisor is like, dude, like what the hell? Like, you know, I'm gonna help you out on this as much as I can. But it was, I don't think I was working necessarily with the right person. So I think it's an important piece to you know work with someone who's knowledgeable for your situation. So I have not pursued that yet, but it has been in the back of my mind that I don't want to let it linger too long because I know typically it's done in that first year. And I mean, also at this point, I have made a significant amount of improvement on the property. So that is something I am considering going into tax season and trying to understand now, and before you know it's tax filing time, what is my strategy gonna be around filing and trying to get my ducks in a row in that way? But yeah, I saw I haven't done that yet, but it's definitely something that's on the back of my mind.
SPEAKER_03:Come on now. And it's one of those where like you can start to see how, for example, the owner of uh Panda Express, right? Uh, he's been the owner for 45 years. He earned last year a little over$900 million and paid zero dollars in taxes through depreciating his real estate, right? And so you can see how, okay, if you start to play that game, how you can play pay nothing in taxes. This year I'm actually getting money back for the first time and I don't know how long I'm getting a check back. And I was like, wow, this is amazing. Because we were able to cost segregate the storage unit, which gave about 300K in savings, right? For both my partner and I, which is like, okay, that that wipes out um, you know, earnings. And so now you're you're earning money back. Um, but what I would say is, yeah, you definitely need to get with the right tax professional. You have enough units to start doing that now. Like this is the time period, especially if you're gonna go into the seller finance on this other deal. Uh, you want to be able to do all the things. And you can still cost segregate even those multifamilies, right? So I did the one up in Snellville because we had two of the units as a short-term rental, two of the units as a long-term rental. So because it was a 50-50 split, we could do either the normal depreciation schedule over 27 years, where you're getting a little bit at a time, or we could take it all up front and do a short-term schedule and take it all up front. And then even for the personal house I live in now, because it's a duplex and we live in one side and rent the other as a short-term rental, we're able to cost segregate this house and continue to just reap savings. So, yeah, that's one of the things that uh I'm getting heavy into now. And and I'm thinking like on a yearly basis, uh at least buy one property minimum and do something like that to save on taxes.
SPEAKER_04:Yeah, absolutely. And my tax strategy definitely needs some work. And it's I've tried to, you know, figure it out and and make it happen. And I think I've been scared by the high CPA costs at times that, you know, especially for a CPA that's worth their weight. Um, but I'm at the point to where I realize that is a need, similar to the cleaning piece. We've talked about this multiple times, but I've I'm realizing now I I have to get on top of this and I definitely need to have a solid strategy in place for that. So I would be curious to know the the you know POSEC firm you used, um, if you don't mind dropping in the chat. But yeah, I definitely, I definitely need to make some strides on that before the end of this year and really get serious about that.
SPEAKER_03:Come on now. I can connect you with them via email. They they do it virtually and in person for a multifamily, they're probably going to send somebody out. But the cost you pay for is well worth the savings, right? It's well worth the savings.
SPEAKER_02:AJ, you were gonna say that yeah, I have a contact as well. I can send you away, Desmond. And also don't feel as bad because I did do a cost segregation report this year and still was not able to take advantage of it because, like you mentioned, just didn't have the proper CF CPA professionals who knew how to exactly handle it. So that is like can't be stressed enough, even if you try to take advantage of a cost segregation report. If you don't have the proper professionals who know how to actually apply it, then it's kind of worthless. The good thing about it is that I'm basically just gonna go ahead and apply it next year. Um, there's a form called a 3115, which is kind of just amending your taxes. So we're just kind of gonna delay that until future years. Hopefully, the next year I do have a meeting with a new CPA at the end of this month. So definitely looking forward to that. Nia, I do have a question for you though. Um, so what are your thoughts on a recapture of taxes if you were to sell your property using the cost segregation? That's something a lot of people don't really bring up. We always talk about the good things about the cost segregation. And, you know, definitely I think it's something worth taking advantage of. But as with anything you jump into, you want to know kind of the downsides or the ramifications of the actions that you take, especially with doing something big as a cost seg.
SPEAKER_03:Absolutely. And I'm happy you brought that up. So it's one where if you're thinking, like, hey, I'm gonna sell this property within the next year, two years, three years, even five years, you probably shouldn't do a cost seg on it. I'm only doing cost segregations on properties I plan to hold for the long term, i.e. that fourplex up in Snellville, this duplex that we just bought that's brand new, built in 2024, um, the storage facility, right? Like, I'm not doing anything with that. There's no maintenance cost, right? And so you should only do it on properties that you plan to hold for a while. And then it goes back to that age-old question, right? Like, hey, um, can I invest my money better right now, right? Considering inflation is going to make the dollar worth a lot less 30 years from now, or over that 27-year depreciation period, can I invest it and make more money now? Or uh, if I don't know what I'm gonna do with that money, is it better to just pay the normal taxes? In my mind, I believe that I can compound it much better. And I'm not taking that cost that I can go and buy in a boat or anything like that and buying more real estate. And so as long as you continue to do that piece, uh, you're gonna be okay. But you have to know, like, hey, I want to hang on to this property for a long time. Otherwise, it doesn't make sense.
SPEAKER_04:Yeah. And I think that makes sense. And also, too, a question I have is do you usually have significant a significant amount of other expenses to help cover those taxes? Like, do you take that cost again that year and use that as carry? Because I mean there's only a certain amount that you're able to get back, right? So I was able to get money back this year as well, but I had done a significant amount of renovation and I was I needed that. I was spending like crazy, but you know, investing in the property to get it to the caliber that it is now. You see, I got some painted accent walls and some abstract colors going on here. So it doesn't work. You can't you can't even tell.
SPEAKER_02:It's all good though. I believe you here we go. Okay, listen.
SPEAKER_04:Okay, yeah, man. Okay, look at the yeah, man. I'm trying to try to step it up a little bit. So that was in college park. I did not do that myself. No, no, no, no.
SPEAKER_03:It would have looked completely different.
SPEAKER_04:I yeah, look how straight the line is. That is way the okay, yeah. So, you know, with that said, I I spent some money improving the property, and I was able to get a check back just based off of that significant amount of renovation. So it's still smart to do a cost egg in a year where you already have other expenses that are potentially covering those taxes.
SPEAKER_03:This is why you have the CPA, right? This is why. So literally, good answer. Uh, they're gonna be able to, they they can get it down to a T. So, like my guy sent me two options before we filed uh for this year, right? He was like, hey, we did these cost eggs, and one he said he said two things. One, you can either get this money back this year, right? Or two, if you know you've bought something and we can do another one for next year, or if you know, hey, I'm gonna need this for next year, we could carry over about a hundred K worth of these Costa Egg savings, and then you would essentially just be neutral. You wouldn't get anything back, but you'd be neutral. And I looked at what we would get back, and I'm like, you know what? I'll take the money to get it back because I know what I'm gonna put it into, like as soon as it hits our account and kind of go from there. So with the right CPA, they're gonna be able to break it down to that level and actually coach you through okay, you should get a cost sec on this property, this property, and that property. The CPA I have, I meet with them on a quarterly basis and they just we just give an update. Hey, here goes how much I've earned from you know real estate, here goes how much I've earned from the short-term rentals, from the management, here goes what we've done from a real estate perspective, buying what we've put into service, here goes the other properties we have. And then we start working through, okay, what should we do in this year to make sure that we're gonna maximize on tax savings? And now that we have a uh a son, that's another piece that I've brought to them. Like, hey, what can we do from savings here, right? There's things that you can invest in, like a 529 plan and things of that nature that'll lower your taxable income. My goal each year now is to pay nothing in taxes, right? To have that money go towards something. Because if it was gonna be 100K in taxes that I was supposed to pay, I'd much rather it go toward a down payment if that's gonna eliminate my tax burden, or go towards some type of investment if you're gonna pay that money anyway.
SPEAKER_04:Yeah, 100% agree. And I think to that point, too, not to get political, right? People will talk about Trump, like, oh man, this guy pays no money in taxes. And then the investors are looking like, man, that's the dream. Like I wish I wish that could be me.
SPEAKER_03:Listen, I just keep silent and keep working, man. Like, let me go get this money real quick.
SPEAKER_04:No, absolutely. And hey, so to that point too, actually, I know we're starting to wrap up, but to that point, I I I would wonder when you were explaining that, what's your door count now? Because I do wonder if it, you know, do you start to gradually step up basically your level of CPA or you know, the the cost of the CPA as your door count start to increase and just as the portfolio starts to get more complex. So just as at a point of curiosity, I'm curious to know what what you're at now because I know you've acquired some of the properties, you know, over these past few years. And then also, not that it's a count of doors or anything like that, but I do think at a certain point that, you know, it just the more doors you have, the more properties you have, it brings more complexity, typically. And typically that requires a more advanced tech strategy. And I I'm still feeling like I'm in this in-between weird spot where I'm I don't have you know just one or two doors, and I don't have like 30 or 40, and you know, the profits are gonna be impacted by paying a PA, right? Potentially, I'm you know, the the that's money, more money going out the door. So it's really something I have to justify and I have to know I'm putting my money in someone worthwhile because I have paid for a CPA and a tax advisor in the past just for advice and conversation that did not really lead to what I was looking for. So now I'm definitely a bit more hesitant to do that and I'm cautious of, okay, well, how do I move, you know, in in this regard? And just I'm curious to hear more about that.
SPEAKER_03:Yeah, so it's fluctuated over the years. I used to have like 30 plus units, right? I've since downsized. So now I'm at including my wife, we're at 12, right? 12 units, and it's not including the storage. It's a mix with single family, duplex, quadplex, and so kind of across the board, mostly in the Metro of Atlanta. And then when you look at the complexity and going with that CPA, it's all about how complex your taxes have gotten, right? At a certain point, once you get to like three plus units, uh, for you, I would say because you have two fourplexes and you're looking to potentially get another one, uh, it's time to start investing in that piece because you're leaving dollars on the table, right? And I think AJ can attest. He's got a couple properties, right? Did the costing, did all the things, but you need a person that is one doing it themselves or have done it for a lot of other investors to where they're not trying to test it out on you. Because if you make a mistake on this thing, it could be a lot of money coming out later down the road. And so the way I judge a CPA is how much can they save me versus what I'm paying? And so, you know, the the guys this year saved me 10x what I was paying them, and that made a lot of sense, right? And all the books are clean, like anybody comes back, we're gonna be good. Uh, and so yeah, that's the way I look at it. AJ, any thoughts on that?
SPEAKER_02:Yeah, that makes a lot of sense. And like you were mentioning, I'm at three properties, four doors, and I'm feeling the burn. I uh there's no way I'm jumping on turbo tax or free tax USA. I mean, we definitely need a CPA for sure. And then now it's at a the next level, it's like you can't just have any regular CPA, right? Like I think the the CPAs we were working with previously, those are just kind of, you know, and not to bash anybody who doesn't own real estate or anything, but just these are you know common families that just maybe have one home and just a family, a couple kids here and there. Like we have three properties, four doors. We're trying to take advantage of cost segregations. And I bring up a cost segregation, she's like, you know, what is that? Like I can't afford to have that at this stage. So, Desmond, I mean, you'd have two properties, but you have like eight doors, right? Something like that. Uh it's time, definitely, uh, for sure, to get someone. Um, I think the tough part about it right now is that you know, all of us are managing and juggling so many different responsibilities uh with our properties and just trying, you know, you just worked on a ton of different renovations, but it's definitely worthwhile to just like dig in and do the research to try to find someone who can handle your tax situation because, like Nissan, like if if you're saving 10X compared to what you put in, I mean, that's definitely it sounds like it's worthwhile for me for sure. So that's just my take on it.
SPEAKER_03:And what AJ, what you just said is true. Like, we're all busy doing a lot of things. I'm always constantly looking at okay, what can be delegated to somebody else to where I don't have to think about this anymore. So that's the whole point of having, you know, the virtual bookkeeper who helps keep everything in line, and then having the the rock star CPAs who can get it together because all I gotta do is connect those two and like, hey, just send them everything they need. And then, and then when we hop on the phone, it's a strategy call. Hey, me, you're making X amount. We recommend doing this with this property. Okay, we're gonna move this over here. Any life changes? Are you planning to buy anything? Yes, this is what we're planning to do. And they give me just the the way that you can write off more stuff. For example, one of the things we're starting uh that we started this year, uh, and we're gonna continue in perpetuity, is the Acaba Home Real Estate team actually takes a trip once a year. Kind of like uh like how companies would do a sales trip, like for hey, the top sales reps, things of that nature. Um, and we reward those guys with a trip. And the trip is company paid, but it all go it also leads to a free trip for me. And all this stuff is a write-off. So it's like, okay, we can go take a trip outside the country somewhere, and it'd be a quote unquote business expense for the whole thing and and kind of you know go from there. So I'm trying to put more stuff like that in to where you're not only increasing your quality of life, but you're saving on taxes and kind of do it in the right way. Yeah, that's very smart. I'm looking to join. If you're looking for the client, hey, listen, y'all gotta get your license. I I can't have unlicensed people over here.
SPEAKER_02:I like free trips. I'm not complaining about that at all.
SPEAKER_03:Yeah, yeah. No, this is good. This is good. Anything else top of mind, guys, for for this Wednesday?
SPEAKER_02:No, I mean, I just want to say this is a great call. It's been some time since I've jumped back on this. I know you kind of did a pause to kind of restructure things, so I um really love everything. Just want to kind of just keep the ball going and keep the momentum up. And let's just all finish out the year. I mean, it's we're we're you know, Q4, um, heading into the end of the year. A lot of different things going on, a lot of different challenges, especially I know that I'm going through and I know others are going through as well. But um just want to encourage and you know motivate you guys to just continue to persevere through and uh just to have you know that financial freedom that we're all looking for.
SPEAKER_03:Come on now. Motivational words to close it out. AJ, we appreciate you. Desmond, anything to add to that? That's a hard act to follow, man.
SPEAKER_04:No, man. I I don't have nothing much more profound than that. I would say, yeah, I echoed that. He said, All I got is these straight painted lines and that set walls behind me.
SPEAKER_03:That's what I got.
SPEAKER_04:I didn't find a speech prepared for the end. No, yeah, this is a thing right now. I definitely want to keep these up, and it's it's yeah, these are great. We should we should do more of these.
SPEAKER_03:Come on now, guys.
SPEAKER_00:I appreciate you hopping on, and I will catch you next week and uh and be safe. Join us every Wednesday at 7 p.m. Eastern as we explore different types of investments that can fast drag your path to financial independence.
